DOL’s New Fair Play Overtime Rules

The new Fair Play Rules amend the overtime regulations of the Fair Labor Standards Act. They become effective August 18, 2004. Under the Fair Play rules, workers earning less than $23,600.00 per year-or $455.00 per week-are guaranteed overtime protection.

The rules simplify the process of determining whether an employee is exempt from the FLSA’s overtime pay requirements under the “white collar” exemptions, i.e., the executive, administrative, professional, computer and outside sales exemptions.

The old long and short duties tests are replaced by a new standard test which retains the short test’s reliance on an employee’s primary duty and drops the old long test requirement that exempt employees spend no more than 20 percent of their time in a workweek performing non-exempt duties.

Summary of the Fair Play Rules

Executive Employees

Salary: Not less than $455 per week; compensated on a salary basis.

Duties: Primary duty: management of the enterprise in which the employee is employed, or a customarily recognized department or subdivision thereof;

Customarily and regularly directs the work of two or more full-time employees or their equivalent; and

Has authority to hire or fire other employees or whose suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.

Administrative Employees

Salary: Not less than $455 per week; compensated on a salary or fee basis.

Duties: Primary duty: performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

Whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance?

Learned Professional Employees

Salary: Not less than $455 per week; compensated on a salary or fee basis.

Duties: Primary duty: performance of work requiring knowledge of an advanced type, and which includes work which is primarily intellectual in character and requires the consistent exercise of discretion and judgment in a field of science or learning that is customarily acquired by a prolonged course of specialized instruction; or

Whose primary duty is the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor?

Computer Employees

Salary: Not less than $455 per week on either a salary or fee basis, or on an hourly basis not less than $27.63 an hour. Must be employed as a computer systems analyst, computer programmer, software engineer or other similar skill in the computer field.

Duties: Primary duty consists of (1) application of systems analysis techniques and procedures, including consulting with users, to determine hardware, software, or system functional specifications; or (2) the design, development, documentation, analysis, creation, testing or modifications of computer systems or programs, including prototypes, based on and related to user or system design specifications; or (3) the design, documentation, testing, creation or modification of computer programs related to machine operating systems; or (4) a combination of the aforementioned duties, the performance of which requires the same level of skills.

Outside Sales Employees

Salary: Not required.

Duties: Primary duty: making sales, or obtaining orders or contracts for services, or for the use of facilities for which a consideration will be paid by the client or customer.

Customarily and regularly engaged away from the employer’s place or places of business.

State Law

States are free to enact laws providing greater protection to employees than does the Fair Labor Standards Act. Currently most states have laws similar to the FLSA providing for overtime pay and white collar exemptions.

Action

Employers should review their policies to ensure compliance with both State and Federal Laws and to determine what changes should be made if the Fair Play Rules go into effect. Since this is an election year, this is not a certainty. On May 4, 2004 the Senate voted to block the new Fair Play Rules.